The Australian Olympic chief John Coates conceded defeat in the Ashes head-to-head with Team GB today, but warned that unless British athletes receive improved levels of funding they will struggle to improve in London four years hence.

John Coates, chairman of the Australian Olympic Committee, bet his British counterpart Lord Moynihan that his team would come out on top, and dismissed the performance of Team GB's swimmers as "not bad for a nation with no pools and not much soap." British athletes look like having the last laugh thanks to an impressive 10 days in Beijing, but Coates warned that sustained investment will be crucial to maintaining performance at a home Olympics.

Coates was closely involved in Sydney 2000 and helped create the Australian elite performance system on which the UK model is based. Central to Australia's success in Sydney - they won 58 medals compared to 41 in Atlanta - was major funding increases in the preceding Olympic cycle.

With the government yet to honour its commitment to provide £100m a year between now and 2012, there are concerns among Olympic stakeholders that the triumph of Beijing will be followed by a cut in funding.

"I think you will finish ahead of us in gold," Coates conceded. "Whether you get there in the overall medals, well you should. We improved 50% with the funding increases we had between 1992 and 1996. Now if you were to do that you would go from 32 medals in Sydney to 48 for all medals. I don't think you will get there, but you will be in the late 40s in London and be very close if not ahead of us there too. The big task is to make sure the government support and the corporate support is maintained.

"The real test is to maintain it afterwards. We surprised a lot of people in Athens by coming fourth with fewer medals being required. We don't want to surrender those objectives, that's our message to our government. That's why we have got to secure some additional funding to be competitive.

"The key is funding and coaching. The keys are talent identification, direct athlete assistance, coaching, international coaching, sports science and back up.

"I am not surprised at Britain's improvement. After Sydney won the Games, we went from 27 medals in Barcelona to 41 in Atlanta. We went up to 58 in Sydney. That's why we were highlighting Britain was going to be a major threat. If it hadn't happened there ought to have been a national inquiry.

"I said at the outset, and my sense of pride says, that we can't let [Great Britain] beat us and they may well beat us this time, but let's use that as the incentive to get the planning right for our high performance and our attack on London 2012."